Federal Express Credit Union v. Barry Lanier ( 2005 )

IN THE COURT OF APPEALS OF TENNESSEE
AT JACKSON
ASSIGNED ON BRIEFS JULY 14, 2005
FEDERAL EXPRESS CREDIT UNION v. BARRY LANIER
Direct Appeal from the Circuit Court for Shelby County
No. CT-005773-01 Kay Robilio, Judge
No. W2005-00194-COA-R3-CV - Filed October 27, 2005
In this appeal, we are called upon to evaluate the propriety of the trial court’s decision to award a
creditor a deficiency judgment against the debtor following the sale of the collateral after the debtor
defaulted on the loan. The debtor filed an appeal to this Court arguing that the creditor failed to
provide him with reasonable notice of the sale of the collateral and that the creditor did not conduct
the sale in a commercially reasonable manner. We hold that the creditor did not provide the debtor
with reasonable notice. Accordingly, we reverse the decision of the trial court and remand this case
to the trial court for further proceedings.
Tenn. R. App. P. 3; Appeal as of Right; Judgment of the Circuit Court Reversed and
Remanded
ALAN E. HIGHERS, J., delivered the opinion of the court, in which DAVID R. FARMER , J., and HOLLY
M. KIRBY , J., joined.
William G. Hatton, Bolivar, TN, for Appellant
David A. Kirkscey, Memphis, TN, for Appellee
OPINION
I.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
For purposes of this appeal, the facts have been set forth in a “Joint Statement of the
Evidence” entered into between the parties pursuant to Rule 24(c) of the Tennessee Rules of
Appellate Procedure. On August 23, 1995, Barry Lanier (“Mr. Lanier” or “Appellant”) signed a
promissory note and security agreement in favor of Federal Express Credit Union (the “Credit
Union” or “Appellee”) to secure funds to purchase a 1995 Lexus automobile. The promissory note
called for Mr. Lanier to make payments in the amount of $199.01 for fifty-nine (59) consecutive
months followed by a balloon payment in the amount of $26,327.55 on July 31, 2000. Mr. Lanier
made the required fifty-nine (59) consecutive monthly payments. However, when it came time to
pay the final balloon payment, he was unable to tender the amount owed. The parties subsequently
entered into negotiations in an effort to refinance the balloon payment, but the negotiations proved
unsuccessful.
At the time of the events giving rise to the instant litigation, Mr. Lanier was employed by
Federal Express Corporation (“Federal Express”). On the promissory note, Mr. Lanier listed his
address as 1214 Central Avenue, Memphis, Tennessee, which remained his home address at the time
the loan matured. After Mr. Lanier defaulted on the loan, the Credit Union repossessed the 1995
Lexus automobile from Mr. Lanier’s home address. On November 29, 2000, the Credit Union sent
a letter by certified mail to Mr. Lanier at his home address advising him that it intended to sell the
vehicle at a private sale on December 15, 2000. The certified mail return receipt was never signed
for or returned. At trial, Mr. Lanier testified that, at the time the Credit Union sent the notice, it
knew he had been in Saudi Arabia for the past several years conducting business for his employer.
In support of this assertion, Mr. Lanier testified to the following: the Credit Union had access to the
computer files of Federal Express which enabled it to learn of Mr. Lanier’s location (i.e., Saudi
Arabia) at the time the notice was sent; the Credit Union and Mr. Lanier spoke several times by
phone and e-mail while he was in Saudi Arabia to negotiate the re-financing of the outstanding
balance; and the Credit Union even contacted him in Saudi Arabia to discuss the indebtedness.
Conversely, Larry Stevenson, the collection manager for the Credit Union, testified that the Credit
Union is a separate and distinct entity from Federal Express, and it did not have direct access to any
of the computer records maintained by Federal Express.
As promised in the letter sent to Mr. Lanier, the Credit Union conducted a private sale of the
1995 Lexus automobile on December 15, 2000. A deficiency remained after the Credit Union
applied the proceeds of the sale to the outstanding loan amount. On May 31, 2001, the Credit Union
filed a “Civil Warrant” in the General Sessions Court of Shelby County against Mr. Lanier to recoup
$10,645.04 remaining on the promissory note and $3,547.99 in attorney’s fees, for a total requested
judgment in the amount of $14,193.03.
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Ultimately, the case came to be heard by the Circuit Court of Shelby County.1 The circuit court
entered an order on January 3, 2005 finding “that [the Credit Union] should be awarded judgment
against [Mr. Lanier] for the sum of $14,193.03.” No additional findings of fact or conclusions of
law are contained in the order. Mr. Lanier filed a timely notice of appeal to this Court presenting
the following issues for our review:
1. Whether the trial court erred in finding that the Credit Union’s notice of the sale of the
collateral was reasonable; and
2. Whether the trial court erred in finding that the sale of the 1995 Lexus automobile was
commercially reasonable.
For the reasons set forth herein, we reverse the decision of the circuit court and remand this case for
further proceedings not inconsistent with this Opinion.
II.
STANDARD OF REVIEW
Our review of this case is complicated somewhat by the terseness of the trial court’s order
and the lack of a complete record of the proceedings below. Ordinarily, “review of findings of fact
by the trial court in civil actions shall be de novo upon the record of the trial court, accompanied by
a presumption of the correctness of the finding, unless the preponderance of the evidence is
otherwise.” Tenn. R. App. P. 13(d) (2005); see also Decatur County Bank v. Smith, No. 02A01-
9903-CV-00074, 1999 Tenn. App. LEXIS 864, at *4 (Tenn. Ct. App. Dec. 27, 1999) (no perm. app.
filed). We review the lower court’s conclusions of law de novo without any presumption of
correctness. Dennis Joslin Co. v. Johnson, 138 S.W.3d 197, 200 (Tenn. Ct. App. 2003) (citing
Union Carbide Corp. v. Huddleston, 854 S.W.2d 87, 91 (Tenn. 1993)).
In the instant case, there are no findings of fact which we may presume to be correct.
Ordinarily, the absence of findings of fact by the trial court would require this Court to conduct an
independent review of the record to determine where the preponderance of the evidence lies. See
1
The record does not contain any disposition of this case by the general sessions court. Apparently, the case
was appealed to the circuit court pursuant to section 16-15-729 of the Tennessee Code, which provides:
No civil case, originating in a general sessions court and carried to a higher court,
shall be dismissed by such court for any informality whatever, but shall be tried on
its merits; and the court shall allow all amendments in the form of action, the parties
thereto, or the statement of the cause of action, necessary to reach the merits, upon
such terms as may be deemed just and proper. The trial shall be de novo, including
damages.
Tenn. Code Ann. § 16-15-729 (2003). “Cases appealed from the general sessions court to the circuit court pursuant to
Tenn.Code Ann. § 16-15-729 should be treated for all purposes as if they originated in the circuit court.” B & G Constr.,
Inc. v. Polk, 37 S.W .3d 462, 465 (Tenn. Ct. App. 2000).
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Kendrick v. Shoemake, 90 S.W.3d 566, 570 (Tenn. 2002) (citing Ganzevoort v. Russell, 949 S.W.2d
293, 296 (Tenn. 1997)); Crabtree v. Crabtree, 16 S.W.3d 356, 360 (Tenn. 2000). However, we
cannot perform this task without a complete record. Thus, we are forced to determine whether the
facts, as set forth in the “Joint Statement of the Evidence,” support the trial court’s judgment as a
matter of law.
III.
DISCUSSION
We begin with an examination of whether the notice of the private sale provided to Mr.
Lanier by the Credit Union was reasonable. Tennessee’s version of Article 9 of the Uniform
Commercial Code, codified at 47-9-101 et seq. of the Tennessee Code, provides, in relevant part,
as follows:
(a) DISPOSITION AFTER DEFAULT . After default, a secured party may
sell, lease, license, or otherwise dispose of any or all of the collateral
in its present condition or following any commercially reasonable
preparation or processing.
(b) COMMERCIALLY REASONABLE DISPOSITION . Every aspect of a
disposition of collateral, including the method, manner, time, place,
and other terms, must be commercially reasonable. If commercially
reasonable, a secured party may dispose of collateral by public or
private proceedings, by one (1) or more contracts, as a unit or in
parcels, and at any time and place and on any terms.
Tenn. Code Ann. § 47-9-610 (2003). Tennessee’s version of Article 9 further provides as follows:
(b) NOTIFICATION OF DISPOSITION REQUIRED . Except as otherwise
provided in subsection (d), a secured party that disposes of collateral
under § 47-9-610 shall send to the persons specified in subsection (c)
a reasonable authenticated notification of disposition.
Tenn. Code Ann. § 47-9-611(b) (2003).2 Implicit in the trial court’s ruling in this case is a finding
that, as a matter of law, the notice provided by the Credit Union was sufficient.
The official comment to section 47-9-611(b) provides as follows: “The notification must be
reasonable as to the manner in which it is sent, its timeliness (i.e., a reasonable time before the
2
Subsection (d) provides that “[s]ubsection (b) does not apply if the collateral is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized market.” Tenn. Code Ann. § 47-9-611(d)
(2003). It is undisputed that subsection (d) is inapplicable to the instant case. Subsection (c) requires the secured party
to “send an authenticated notification of disposition to . . . the debtor.” Tenn. Code Ann. § 47-9-611(c) (2003).
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disposition is to take place), and its content.” Tenn. Code Ann. § 47-9-611 cmt. 2 (2003) (emphasis
added). This Court has previously addressed the policy justification for requiring the creditor to send
the debtor reasonable notice of the sale of the collateral:
We think the provision for notice in connection with a sale is
intended to afford the debtor a reasonable opportunity (1) to avoid a
sale altogether by discharging the debt and redeeming the collateral
or (2) in case of sale, to see that the collateral brings a fair price.
Int’l Harvester Credit Corp. v. Ingram, 619 S.W.2d 134, 137 (Tenn. Ct. App. 1981) (citing
Mallicoat v. Volunteer Fin. Loan Corp., 415 S.W.2d 347, 350 (Tenn. Ct. App. 1966)).
On appeal, Mr. Lanier argues that the trial court erred in finding that the notice of the sale
of the collateral provided by the Credit Union was reasonable and adequate under the circumstances
present in this case. Mr. Lanier does not contest the timeliness or content of the notice. Instead, he
contests the reasonableness of the manner in which it was sent. “[T]he reasonableness of the notice
also encompasses a consideration of where the notice was sent.” R & J of Tenn., Inc. v.
Blankenship-Melton Real Estate, Inc., 166 S.W.3d 195, 203 (Tenn. Ct. App. 2004) (citing
Commercial Credit Corp. v. Cutshall, 28 U.C.C. Rep. Serv. (Callaghan) 277 (Tenn. Ct. App.
1979)). He urges this Court to find that the notice sent by the Credit Union does not amount to
reasonable notice where (1) the record establishes that the Credit Union knew he was not at his home
address but in a foreign country at the time it sent the notice, and (2) the certified mail return receipt
was never signed for by Mr. Lanier or returned to the Credit Union. Conversely, the Credit Union
urges this Court to find that the notice provided was reasonable because (1) Mr. Lanier maintained
his home address in Memphis while he worked in Saudi Arabia, (2) he could have his mail
forwarded to him by Federal Express at no charge since he worked in Saudi Arabia, (3) his wife
remained in Memphis while he was in Saudi Arabia, and (4) it must be assumed that Mr. Lanier
received the letter since the letter was not returned to the Credit Union.
At the outset, we must ascertain those facts which can be supported by the limited record in
this case. After reading the “Joint Statement of the Evidence” filed by the parties, it appears that the
question of whether the Credit Union knew that Mr. Lanier was in Saudi Arabia when it sent the
notice of the sale of the collateral was a disputed issue of fact at trial. In the “Joint Statement of the
Evidence,” the parties stipulate that Mr. Lanier testified that the Credit Union knew he was in Saudi
Arabia when it sent the notice of the sale of the collateral. Ordinarily, we defer to the trial court’s
findings of fact which hinge on the credibility of a witness. See Wells v. Tenn. Bd. of Regents, 9
S.W.3d 779, 783 (Tenn. 1999) (“[A]ppellate courts will not re-evaluate a trial judge’s assessment
of witness credibility absent clear and convincing evidence to the contrary.”). It could be inferred
from the trial court’s ruling that, since the trial court found in favor of the Credit Union, the trial
court necessarily found that the Credit Union did not know that Mr. Lanier resided somewhere other
than his home address listed in the promissory note when it sent the notice. However, we need not
make this inference. The Credit Union concedes in its brief that it had knowledge that Mr. Lanier
was in Saudi Arabia when it sent the notice, stating as follows: “Granted, he was working in Saudi
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Arabia for Federal Express, but he was still maintaining his residence in Memphis”; “he most
assuredly had set up some method to have his mail forwarded to him”; “Appellant’s wife was still
in Memphis.” Thus, we must conclude that the Credit Union knew that Mr. Lanier was living in
Saudi Arabia at the time it sent the notice of the sale of the collateral to his home address in
Memphis.
The Credit Union states that, since the letter was not returned to the Credit Union, this Court
is to assume that it reached Mr. Lanier. The “Joint Statement of the Evidence” merely provides as
follows: “The certified mail return receipt was never signed for or returned.” This Court is not
permitted to make the assumption urged upon it by the Credit Union. We must simply take the
following stipulated fact to be true: the Credit Union never received any certified mail return receipt
indicating that Mr. Lanier received the notice. There are additional statements of fact made by the
Credit Union on appeal which have no support in the record. The Credit Union asserts as fact that
Mr. Lanier was capable of having his mail forwarded to him in Saudi Arabia free of charge by
Federal Express. This fact is nowhere in the “Joint Statement of the Evidence” presented to this
Court on appeal. Therefore, this unproven fact has no bearing on our decision on appeal. Moreover,
the Credit Union asserts that Mr. Lanier’s wife remained in Memphis while he was in Saudi Arabia,
presumably at the same address where it sent the notice. However, the “Joint Statement of the
Evidence” merely provides as follows: “The Appellant was married, with his wife living at said
residence.” From this terse statement we cannot assume as true the fact the Credit Union urges upon
this Court. There is nothing in the limited record to indicate that Mr. Lanier’s wife lived at the
residence when the notice was delivered or that she received the notice sent by the Credit Union.
Thus, we are only concerned with whether the notice of the sale of the collateral was proper
based on the following facts: (1) the Credit Union knew that Mr. Lanier was in Saudi Arabia when
it mailed the notice to his residence in Memphis, and (2) the Credit Union proceeded with a sale of
the collateral when it had yet to receive a certified mail return receipt indicating that Mr. Lanier had
or had not received the notice it sent to his residence in Memphis. Both parties have cited this Court
to cases supporting their respective position on appeal. However, our decision in R & J of
Tennessee, Inc. v. Blankenship-Melton Real Estate, Inc., 166 S.W.3d 195 (Tenn. Ct. App. 2004),
which discusses the cases relied on by the parties, controls our resolution of this case and requires
that we find that the Credit Union did not provide Mr. Lanier with reasonable notice of the sale of
the collateral at issue in this case.
In R & J of Tennessee, Inc., the debtor executed a guaranty agreement promising to remain
personally liable on a promissory note entered into by his business, in which he provided his home
address. R & J of Tenn., Inc., 166 S.W.3d at 198. However, the debtor moved after entering into
the personal guaranty, and he never notified the bank of his new address. Id. at 199. When the
company defaulted on the loan, the creditor sent, by certified mail, a notice to the debtor at the
address listed on the personal guaranty indicating that the collateral would be sold at a public sale.
Id. Even though the creditor had yet to receive any indication that the notice had reached the debtor,
it went ahead and conducted a sale of the collateral. Id. On appeal, the debtor argued that the notice
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given by the creditor was not reasonable. Id. at 201. We agreed with the debtor and reversed the
trial court’s decision that the notice of the sale of the collateral was reasonable. Id. at 205.
In finding that the creditor in R & J of Tennessee, Inc. did not provide reasonable notice of
the sale of the collateral to the debtor, we stated:
The definition section applicable to Tennessee’s version of Article 9
does not define “notice,” but we find guidance in the general
definition section of the Code, which provides:
A person “notifies” or “gives” a notice or notification
to another by taking such steps as may be reasonably
required to inform the other in ordinary course
whether or not such other actually comes to know of
it. A person “receives” a notice or notification when:
(A) It comes to his attention; or
(B) It is duly delivered at the place of business
through which the contract was made or at any other
place held out by him as the place for receipt of such
communications[.]
Tenn. Code Ann. § 47-1-201(26) (2003) (emphasis added).
....
In support of his argument that the notice given was not
reasonable, [the debtor] relies on our decision in Mallicoat v.
Volunteer Finance & Loan Corp., 57 Tenn. App. 106, 415 S.W.2d
347 (Tenn. Ct. App. 1966). In Mallicoat, the secured party sent a
notice of sale to the debtor by certified mail, but the notice was
returned to the secured party undelivered. Mallicoat, 415 S.W.2d at
349. After receiving the returned notice, the secured party continued
to conduct a sale of the collateral and sued the debtor for a deficiency
judgment. Id. In finding the notice in that case insufficient under the
predecessor statute to section 47-9-611, we stated:
In view of the undisputed proof in this case that the
debtor did not receive the notice and that the secured
creditor was aware that he had not received it, it is our
opinion the creditor not only failed to show a
compliance with the Act but that the record
affirmatively shows a lack of compliance and a
conscious disregard of the debtor’s right to notice.
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The property was not perishable. The debtor lived in
Knoxville where the creditor had its place of business
and sold the property. In addition, the creditor had
information as to where the debtor was employed and
where his parents lived. Yet, the sale was allowed to
proceed without any further effort to comply with the
notice requirement.
Id. at 350; First Tenn. Bank Nat'l Ass'n v. Helton, No.
03A01-9501-CV-00026, 1995 Tenn. App. LEXIS 339, at *5-6 (Tenn.
Ct. App. May 23, 1995).
Courts throughout the country vary as to whether the secured
party has the burden of proving that the debtor or a secondary obligor
received actual notice of a pending sale. See Richard C. Tinney,
Annotation, Sufficiency of Secured Party's Notification of Sale or
Other Intended Disposition of Collateral Under UCC § 9-504(3), 11
A.L.R. 4th 241, §§ 14-16 (2003). Many of our sister states interpret
the notice provision to require only that the creditor send notice. See
Underwood v. First Ala. Bank of Huntsville, 453 So. 2d 742, 745
(Ala. Civ. App. 1983); Hall v. Owen County State Bank, 175 Ind.
App. 150, 370 N.E.2d 918, 925 (Ind. Ct. App. 1977); McKee v. Miss.
Bank & Trust Co., 366 So. 2d 234, 238 (Miss. 1979); Commerce
Bank of St. Louis v. Dooling, 875 S.W.2d 943, 946 (Mo. Ct. App.
1994); First Nat'l Bank & Trust Co. of Lincoln v. Hermann, 205 Neb.
169, 286 N.W.2d 750, 752 (Neb. 1980). Our decision in Mallicoat,
however, demonstrates that Tennessee requires more than a mere
“sending” in order for a secured party to be in compliance with the
statute. James J. White & Robert S. Summers, Uniform Commercial
Code § 26-10, at 987 (1972).
At the other end of the notice spectrum, we have held that the
notice requirement is satisfied when the following occurs:
The sending of notice, certified, return receipt
requested, is commercially reasonable. When a
plaintiff forwards notice to the debtor’s proper
address, certified, return receipt requested, and the
notice is received at that address and returned signed
by someone at the address, it is reasonable for plaintiff
to assume that the defendant received the notice.
Caterpillar Fin. Services Corp. v. Woods, No. 89-326-II, 1990 Tenn.
App. LEXIS 117, at *7-8 (Tenn. Ct. App. Feb. 22, 1990). Our case
law makes clear that “the creditor will not be forced to take
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responsibility for lost mail or the debtor’s refusal to accept properly
delivered mail.” Nationsbank v. Clegg, No. 01-A-01-9510-CH-00469,
1996 Tenn. App. LEXIS 214, at *14 (Tenn. Ct. App. Apr. 10, 1996).
Yet, we have also made clear that:
While absolute proof of receipt of notice may not be
required in every instance, a creditor, who only makes
one attempt to contact the debtor, and is left uncertain
of receipt of the notice, has not fulfilled its obligation
to the debtor when it proceeds with a disposition less
than two weeks from mailing its first notice.
Id. at *15-16.
We disagree with [the debtor’s] assertion that section
47-9-611(b) requires the secured party to prove that the secondary
obligor actually received the notice. See Commercial Credit Corp. v.
Cutshall, 28 U.C.C. Rep. Serv. (Callaghan) 277 (Tenn. Ct. App.
1979). Based on the facts presented to the trial court below, however,
we find the trial court’s holding that notice in this case was sufficient
under the statute to be erroneous as a matter of law. We are mindful
that [the debtor] bears some responsibility for not receiving notice in
this case. See The Cent. Trust Co. of Northeastern Ohio v. Snair, No.
CA-5818, 1982 Ohio App. LEXIS 15214, at *2-3 (Ohio Ct. App.
June 23, 1982); Gen. Motors Acceptance Corp. v. Horn, No. 5861,
1978 Ohio App. LEXIS 11155, at *5 (Ohio Ct. App. July 20, 1978).
However, [the creditor] sent the notice to [the debtor] on June 11,
2002, and conducted a sale ten days later on June 21, 2002, without
receiving any indication as to whether the notice actually reached [the
debtor]. We find, therefore, that this amounts to unreasonable notice
under the statute and reverse the trial court’s holding on this issue.
See Nationsbank v. Clegg, No. 01-A-01-9510-CH-00469, 1996 Tenn.
App. LEXIS 214, at *15-16 (Tenn. Ct. App. Apr. 10, 1996).
Id. at 203–05.
The facts in the instant case fit squarely within our holding in R & J of Tennessee, Inc. Like
the creditor in R & J of Tennessee, Inc., the Credit Union, on November 29, 2000, sent the notice of
the sale of the collateral to the address Mr. Lanier provided on the promissory note. On December
15, 2000, approximately seventeen (17) days later, the Credit Union, as did the creditor in R & J of
Tennessee, Inc., proceeded to conduct a sale of the collateral without having received any indication
as to whether the notice reached the debtor. As we stated in R & J of Tennessee, Inc., this amounts
to unreasonable notice. See Nationsbank, 1996 Tenn. App. LEXIS 214, at *15–16 (finding that the
creditor, who sent only one notice and proceeded to conduct a sale of the collateral a short time later
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without learning whether the debtor received the notice, provided unreasonable notice to the debtor).
Moreover, the facts present in this case more forcefully support a finding that the Credit Union did
not provide Mr. Lanier with reasonable notice. Unlike the creditor in R & J of Tennessee, Inc., the
Credit Union, as it readily concedes in its brief filed with this Court, had actual knowledge that Mr.
Lanier was in Saudi Arabia and not at the address where it sent the notice.3 Despite knowing the
exact whereabouts of Mr. Lanier, nothing in the record indicates that the Credit Union did anything
to ensure that Mr. Lanier received the notice while in Saudi Arabia.
“The requirement of notice is for the benefit and protection of the debtor.” Mallicoat, 415
S.W.2d at 350. “The requirement of notice is not a mere formality . . . .” Gen. Motors Acceptance
Corp. v. Middleton, No. 02A01-9103-CH-00033, 1991 Tenn. App. LEXIS 820, at *5 (Tenn. Ct.
App. Oct. 16, 1991) (no perm. app. filed). This Court has previously expressed its disfavor with the
practice of providing perfunctory notice as a matter of form, stating:
“Notice which is a mere gesture is not notice. The means employed
must be such as one desirous of actually informing the absent party
might reasonably adopt. Mullane v. Central Hanover Bank & Trust
Co., 339 U.S. 306, 70 S. Ct. 652, 94 L.Ed. 865.”
Mallicoat, 415 S.W.2d at 351 (citing Burden v. Burden, 313 S.W.2d 566, 570 (Tenn. Ct. App.
1957)). Accordingly, we conclude that the Credit Union did not provide Mr. Lanier with reasonable
notice of the sale of the collateral as required by section 47-9-611 of the Tennessee Code.
Next, we turn to the second issue raised by Mr. Lanier on appeal. He contends that, since the
Credit Union failed to provide reasonable notice in this case, the subsequent sale of the collateral is,
as a matter of law, commercially unreasonable. We cannot agree.
Tennessee’s version of Article 9 requires that “[e]very aspect of a disposition of collateral,
including the method, manner, time, place, and other terms, must be commercially reasonable.”
Tenn. Code Ann. § 47-9-610(b) (2003). However, lack of reasonable notice of the sale of the
collateral is merely “[o]ne element bearing on [the] question of whether the sale was ‘commercially
reasonable.’” Mallicoat, 415 S.W.2d at 351; see also Decatur County Bank v. Smith, No. 02A01-
9903-CV-00074, 1999 Tenn. App. LEXIS 864, at *8–9 (Tenn. Ct. App. Dec. 27, 1999) (no perm.
app. filed); Gen. Motors Acceptance Corp., 1991 Tenn. App. LEXIS 820, at *11. Even though a
creditor may fail to provide reasonable notice of the sale of the collateral to the debtor, it may still
seek to recover a deficiency judgment resulting from such sale. Gen. Motors Acceptance Corp.,
3
In R & J of Tennessee, Inc., the debtor attempted to prove that the creditor had actual knowledge of his correct
address by pointing to a federal complaint, which listed the debtor’s correct address, filed by the creditor against the
debtor on the date of the sale of the collateral. R & J of Tennessee, Inc., 166 S.W .3d at 202. The debtor attached a copy
of the federal complaint to his motion to alter or amend the trial court’s judgment that the notice provided by the creditor
in that case was reasonable. Id. The trial court denied the debtor’s motion to introduce the newly discovered evidence,
and we found that the trial court did not abuse its discretion in denying the debtor’s motion. Id. Accordingly, we
declined to consider the contents of the federal complaint on appeal. Id.
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1991 Tenn. App. LEXIS 820, at *7. “The burden of proving that a sale of collateral is commercially
reasonable under these statutes is on the secured party seeking the deficiency judgment.” Decatur
County Bank, 1999 Tenn. App. LEXIS 864, at *7 (citations omitted). Moreover, since the Credit
Union failed to provide Mr. Lanier with reasonable notice of the sale of the collateral, Mr. Lanier
may be entitled to certain statutory damages. See Tenn. Code Ann. § 47-9-625 (2003); R & J of
Tennessee, Inc., 166 S.W.3d at 210; Mallicoat, 415 S.W.2d at 351; Gen. Motors Acceptance Corp.,
1991 Tenn. App. LEXIS 820, at *7.
While the trial court’s order does not expressly state as much, it is possible to infer that, by
ruling in favor of the Credit Union, the trial court necessarily ruled that the sale of the collateral was
commercially reasonable. However, there are no facts in the “Joint Statement of the Evidence,”
other than those supporting our conclusion that the Credit Union did not provide reasonable notice
in this case, which would enable us to adequately address this issue. See Mallicoat, 415 S.W.2d at
351 (“There is no finding by the trial judge on this question and the record is not such that we can
determine the rights of the parties.”). Given our need to reverse the trial court’s ruling, in so far as
it found the notice provided to Mr. Lanier to be reasonable in this case, we remand this case to the
trial court for further proceedings on (1) whether the sale of the collateral by the Credit Union was
commercially reasonable in this case, and (2) whether Mr. Lanier is entitled to statutory damages for
the Credit Union’s failure to provide reasonable notice of the sale. See R & J of Tennessee, Inc.,
166 S.W.3d at 210–11.
IV.
CONCLUSION
For the aforementioned reasons, we reverse the ruling of the trial court and remand this case
for further proceedings not inconsistent with this Opinion. Costs of this appeal are to be taxed to the
Appellee, Federal Express Credit Union, for which execution may issue if necessary.
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ALAN E. HIGHERS, JUDGE
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